RInfra to sell power biz to Adani for ₹18,800 crore
Reliance Infrastructure Ltd on Thursday said it has signed a definitive binding agreement to sell its Mumbai power business to Adani Transmission Ltd for ₹18,800 crore.
While initially the company will be paid ₹13,251 crore, about ₹5,000 crore will come into the company’s books after the successful resolution of certain regulatory issues, most likely in financial year 2018-19, Lalit Jalan, CEO of the company told Mint. He added that the deal is likely to close by March, 2018.
The deal will see the Adani Group taking over the distribution of over 1,800 MW of power to roughly 30 lakh customers in Mumbai and 500 MW of thermal power generation capacity.
In a statement, Gautam Adani, the chairman of the Adani Group, said: “We see a massive growth opportunity and will look at both organic and inorganic opportunities to build a market leading distribution company. With this acquisition, Adani Transmission will enjoy benefit of scale and of being an integrated distribution and transmission in India.”
Reliance Infrastructure said the entire proceed from the sale will be utilised to repay debt and post the deal; it will be completely debt free.
As of September, the Anil Dhirubhai Ambani Group (ADAG) company owed lenders well over ₹10,000 crore.
“This monetisation is a major
MUMBAI:
step in RInfra’s deleveraging strategy for future growth,” the company said in a statement.
The hiving off of the Mumbai power business, however, doesn’t mean the end of the road for Reliance Infrastructure’s power distribution dreams.
“We have our Delhi distribution business, which is twice the size of Mumbai distribution,” Jalan said.
The focus of the company, however, is now clearly on its engineering, procurement and construction (EPC) and defence portfolios.
“Our main focus area for growth will be EPC and defence. Today, our EPC order book, including the ones where we have been declared L1, is in excess of ₹10,000 crore and in 2-3 years will build up to ₹50,000 crore,” Jalan said.
In the quarter ended September, EPC accounted for just 11% of Reliance Infrastructure’s revenue.
The deal between Reliance Infrastructure and Adani Transmission is not the first between the two groups. Back in October, the former had sold its Western Region System Strengthening Scheme (WRSSS) business to the later for ₹1,000 crore.
Reliance Infrastructure’s Mumbai power business is the country’s largest private sector integrated power utility, which distributes power to nearly 3 million residential and commercial consumers in Mumbai as well as its suburbs, covering a total area of 400 square kilo metres.
At peak demand, it caters over 1,800 MW of power.